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Legislation establishing the Illinois Secure Choice Savings Program, which would be the first of its kind implemented in the United States, will soon reach the governor’s desk. The measure, sponsored by State Senator Daniel Biss (D-Evanston), secured House passage yesterday. The Senate, which first passed the measure in April, voted today to adopt several amendments the House had added.
“Retirement insecurity for private sector workers is a serious and growing problem with a surprisingly commonsense, intuitive solution,” Sen. Biss said. “Thanks to Majority Leader Barbara Flynn Currie, who sponsored Secure Choice in the House, the many advocacy and business groups that supported this effort and my colleagues who were willing to help put this legislation into its final form, Illinois has taken an unprecedented step toward making retirement a financially viable option – for the first time – for millions of workers.”
Currently, 2.5 million private sector workers in Illinois have no access to retirement savings through their employers. Because those without employer-based savings options are statistically much less likely to save for retirement and because many of those without pensions or retirement accounts are low-wage workers, Illinois faces a future in which residents increasingly retire into poverty or are forced to continue working far into old age. For two-thirds of today’s retirees, Social Security is their primary source of income. More than one-third of retirees (and almost half of African-American retirees) rely on Social Security for more than 90 percent of their income.
“The opportunity to save using a Secure Choice account will prevent many seniors from facing appalling choices — whether to buy food or medication, for example, or whether to live in poverty or continue working despite declining health,”Sen. Biss said. “Neither employers nor the state will incur any financial risk for these portable accounts, and small business groups support Secure Choice because it will boost their ability to compete with larger companies for the best new hires.”
If signed into law, Senate Bill 2758 will offer portable accounts to most employees who do not already have access to employer-based plans. New businesses and those with fewer than 25 workers can participate voluntarily. Workers can choose how much of their paychecks to invest and may opt out of the program at any time. Participants will also be able to select from higher-risk and lower-risk investment options.
Unlike pension plans, Secure Choice accounts will not be funded or guaranteed by the state or employers. Pooling the individual accounts will allow for lower fees and diversified, professionally managed investments. All administrative costs will be covered by participant contributions.
“I applaud Sen. Biss and Leader Currie for championing financial security, and we all thank the businesses, nonprofits and religious groups that helped make Illinois the first in the nation to take this innovative step,” said Treasurer-elect Mike Frerichs. “I’m honored to have helped millions of middle class Illinoisans save their own money for their retirement, and I look forward to implementing Secure Choice as the next state treasurer.”
“Illinois has a proud history of proactive leadership, and I hope other states give serious consideration to the Secure Choice model to offer retirement security to their residents,” Sen. Biss said.